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Technology Can Aid, Not Replace, Appraisers

February 17, 2022 by Appraisal Institute Staff

This post was written by Appraisal Institute President Jody Bishop, MAI, SRA, AI-GRS

New and exciting technology is all around us: we can speak to our cars, use robots to clean our floors, and control our heating from an app on our phones. Big data and artificial intelligence have changed how integrated our lives are with tech. At the Appraisal Institute, we’re hardly tech phobic, in fact, appraisers use technology frequently in their daily work. The typical software packages used by appraisers leverage an assortment of technologies and resources that help appraisers analyze local markets, including practical applications of “big data.”

We’ve seen several companies, however, developing software intended to mimic or supplant human appraisal, with Zillow being the most prominent example. Through their “Zestimate” platform, the company argued it could make real estate investment decisions based on their automated valuation model. When it comes to the biggest purchases in our lives – our homes – an expert who sees, walks, and touches a home to understand its individual value on the market will almost always generate a more credible, reliable opinion of value than what a tech model can offer. At the Appraisal Institute, we say that an appraisal should mirror the market, not speculate on it. When it comes to AVMs, we shouldn’t guess, either.

For so many of us, the COVID-19 pandemic has accelerated the use of technology to ensure safe access to the goods and services we need. In the appraisal profession, this has also been the case, especially in the residential market. To ensure safety of all involved, it makes sense that appraisers would take advantage of the benefits that technology and, in some cases, an off-site appraisal can provide.

Appraisers can rely on hardware such as drones, or applications such as FaceTime or Zoom, to see the exteriors or interiors of a property if it is unsafe to visit a home in person. Appraisers should carefully examine these technologies, however, to assess fraud or data flaw risks and potential liabilities before relying on them.

Ultimately, there are fundamental differences between an AVM and an appraisal. Our Designated Members bring a high level of quality and control that outvalues an AVM, and even in the pandemic, appraisers can use technology to help keep them safe, without technology cutting out all the benefit an appraiser brings to a valuation.

An AVM’s primary assets are relatively low cost and a comparatively quick turnaround time. But you get what you pay for. Think of an AVM as a piece of information about a property, which is based on various public records or multiple listing service data, and little else. Often, both sources have incorrect, outdated, and unconfirmed data that reduces the reliability of the information. AVMs are completely unable to inspect a property to determine quality and condition. They also cannot evaluate complex issues, such as whether a property faces any economic or physical obsolescence that might dramatically impact the salability and value of that home.

A home purchase is a serious undertaking and deserves accuracy and detail that only an expert appraiser can bring. Appraisers use their experience and education to determine which comparable sales to use and what adjustments, if any, to make. They are trained to apply the most applicable methodology when generating an opinion of value, and that training helps ensure a property’s value isn’t above – or below – what it should be. Appraisers dedicate themselves to being lifelong learners – and are constantly learning about the new trends and policies in appraisals through required courses and volunteer trainings.

Appraisal Institute professionals with the MAI, SRA, AI-GRS or AI-RRS designations provide demonstrated knowledge well beyond the minimum that licensing, or certification implies. Tools can be helpful, but secondary, to a well-trained appraiser’s education, experience and ethics.

Buying or selling a home is most people’s largest financial transaction – and knowing the true value of a property is crucial in setting prices or making offers that credibly reflect the specifics of a single home within the market. AVMs such as the “Zestimate” perform most accurately on homes with few updates or upgrades, such as floor plans and in communities where there are many houses of the same style. Yet, what they miss are the details – details that expert human appraisal will identify and which can be the reason why a home’s value is higher, or lower, than its neighbors. The closer you zoom in, from a city to a community, to a block, to your home – the less reliable an AVM model gets.

Even in the pandemic, we continue to believe that a traditional appraisal with a full inspection by our highly-trained Designated Members is the gold standard of security for all parties involved in a real estate transaction. At the Appraisal Institute, we stand by our appraisers, and the significant value they provide to lenders and consumers.

Filed Under: technology and valuation, The Appraisal Institute Tagged With: appraisal technology, appraisals, Appraisers, AVM, big data, data flaw risks, designated appraiser, home purchase, home value, opinion of value, property inspection, real estate, salability, technology, value

Appraisal Institute Reinforces Commitment to Expand Diversity, Tackle Housing Challenges

October 21, 2020 by Appraisal Institute Staff

With the critical issue of racial justice being examined throughout the country, the Appraisal Institute is striving to expand opportunities for aspiring minority appraisers, combat unconscious bias in valuation and find solutions to promote the flow of credit in economically disadvantaged neighborhoods.

[Read more…]

Filed Under: appraisal bias, appraiser diversity

AI Seeks to Partner with TAF on Alleged Bias in Valuation

August 28, 2020 by Appraisal Institute Staff

As the pandemic continues to create uncertain times for appraisers across the country, I remain very proud of the Appraisal Institute’s professionals. With these unprecedent times, and increased attention on alleged valuation bias, AI is doing everything that we can to advocate on appraisers’ behalf. Learn more about that, and other timely updates, from the past month.

[Read more…]

Filed Under: 2020 Appraisal Institute President's Messages

AI Urges Passage of Appraisal Portal Legislation

July 31, 2020 by Appraisal Institute Staff

I’m pleased to report that AI once again took a position in advocating for the valuation profession in our nation’s Congress. Learn more about that, and other timely updates, from the past month.

[Read more…]

Filed Under: 2020 Appraisal Institute President's Messages

Golf Course HOAs Should Carefully Consider Financial Security Options: The Appraisal Journal

July 18, 2020 by Appraisal Institute Staff

Homeowners associations should carefully consider all available methods for maintaining value in golf course communities, according to an article from the Spring 2020 issue of The Appraisal Journal.

[Read more…]

Filed Under: The Appraisal Institute

AI Webinars Provide Timely Information for Appraisers

June 26, 2020 by Appraisal Institute Staff

We’ll work to get through this challenging time together! I remain extremely impressed by the manner in which AI professionals across the country are adapting and exceeding the basic requirements of their clients. The Appraisal Institute is committed to providing you with the most current information about the coronavirus. Learn more below about that and other news from the past month.

[Read more…]

Filed Under: 2020 Appraisal Institute President's Messages

Appraisal Institute Webinars Deliver Vital Coronavirus Information

May 29, 2020 by Appraisal Institute Staff

Stay strong! Many of us are busy professionally, while I’m sure we’re all dealing with some challenges as well. Keep up the good work, continue turning to the Appraisal Institute for the most current information about the coronavirus, and know that we’ll get through this together.

Here’s more about that and other news from the past month.

[Read more…]

Filed Under: 2020 Appraisal Institute President's Messages

Appraisal Institute Webinars Address Coronavirus Challenges

May 1, 2020 by Appraisal Institute Staff

Is your appraisal business seeking answers to help navigate the coronavirus crisis? Are you a real estate valuation professional who is trying to keep up with the latest information? The Appraisal Institute is here to help by making available three webinars that addressed critical COVID-19 valuation issues in March and April.

[Read more…]

Filed Under: coronavirus appraisals

Appraisal Institute Facebook Live Sessions Tackle COVID-19 Issues

April 28, 2020 by Appraisal Institute Staff

Are you interested in the latest information about virtual inspections and accounting-related coronavirus topics?

[Read more…]

Filed Under: conservation easement appraisals, conservation easements, desktop appraisals, exterior appraisals

Federal Banking Agencies Defer Some Appraisals Due to COVID-19

April 24, 2020 by Appraisal Institute Staff

While this continues to be a challenging time for many of us, I am deeply proud of the Appraisal Institute’s efforts to remain at the forefront of providing timely and relevant information, … and I’m very impressed by the way AI professionals across the country are staying as positive and productive as possible.

[Read more…]

Filed Under: 2020 Appraisal Institute President's Messages

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